If the Federal Government’s continuing Northern Territory intervention has had one stand-out success it has been in centralising power in Jenny Macklin’s Department of Families, Housing Community Services and Indigenous Affairs.

Under new arrangements governing the control and licensing of community stores in the remote Territory, the department will not only take over the management of many of the Territory’s community stores, but also license any new operators. The department will then determine which stores can be used by Aboriginal people whose income it controls.

Outback Stores, currently owned by the statutory authority Indigenous Business Australia (IBA), is being taken over by the department. In recent months, IBA has expanded its empire of stores in the NT to 16, with more stores planned. That expansion has in large part been made possible by favourable legislative treatment and funding from IBA’s potential departmental owner.

According to John Kop, the CEO of Outback Stores, the transfer of ownership of Outback Stores from IBA started in early November and is currently undergoing “due diligence”.

In Yuendumu, the local Yuendumu Social Club, which operates the community’s “Big Shop”, has been trying to get a departmental licence to accept quarantined income for months.

In late November, the managers of the Big Shop wrote to Minister Macklin expressing their “extreme concerns” about possible Government-sanctioned manipulation of the local retail food market and the apparent stonewalling of applications for their shop to be licensed to accept income quarantined by the NT Intervention.

Yuendumu residents already have 50% of their welfare payments quarantined. Beginning this week, several hundred thousand dollars of Kevin Rudd’s Christmas bonus money will flow into Yuendumu. In Yuendumu 100% of those bonuses will be similarly quarantined.

The Yuendumu Social Club asked Minister for Indigenous Affairs Jenny Macklin:

How can it be considered fair trading or beneficial to the community to give this money to these residents and then tell them that they have to use it in only one store…or force them into Alice Springs…(w)hy shouldn’t the people in Yuendumu be given the same opportunities as people in town to decide where and on what they should spend their money on?

The Yuendumu Social Club store is locally owned and has operated since 1972, and, like many small stores in remote Australia, has had its share of financial and management troubles and triumphs. For over three decades The Big Shop has provided a full-service supermarket and service station in what must be one of the most difficult markets in Australia – virtually all of its clients live in grinding poverty, it is at the end of a long, expensive and dusty supply chain and can exercise little influence on its suppliers. It has never taken a dollar from any Government and has always supported local ceremonial and sorry business and sporting activities.

The other locally-owned store is the Mining Store, known locally as just “Mining”, which provides an idiosyncratic but locally-loved convenience store service from a converted Nissen hut. When the arrival of income-management at Yuendumu was announced in February 2008 neither the Big Shop nor Mining was interested in participating in that scheme. At the time the Big Shop was struggling in one of its occasional financial, management and administrative troughs and Mining was just not placed to provide the full service required to meet the particular standards required by FaHCSIA.

Unable to convince the Big Shop owners that they should participate in FaHCSIA’s income quarantining scheme, the NTER Task Force hunted around for an alternative. This is where the Outback Stores come in.

Outback Stores was established by the previous Indigenous Affairs Minister Mal Brough in 2006 and is wholly-owned (for now at least) by the Federal Government statutory authority Indigenous Business Australia.

16 of the 24 stores that Outback Stores operate across northern Australia are in the NT, where Outback Stores has been granted a preferential corporate licence to operate stores and receive welfare payments quarantined as part of Macklin’s Intervention. This means that, unlike any other proponent wishing to run a store on ‘prescribed land’ in the NT, Outback Stores does not have to go through the onerous and confusing requirements established by FaHCSIA in order to get a licence to operate.

Undoubtedly, the management and operational regimes established by Outback Stores have lifted the standards of service, governance and quality of store services in many communities, particularly those where only one store may have been struggling to make ends meet. But it is those townships where more than one store operates that many see that the preferential treatment given to Outback Stores by FaHCSIA and the NT Intervention task Force gives rise to real concerns about market manipulation and anti-competitive conduct.

Outback Stores provides a turnkey — “walk-in, walk-out” establishment service for new stores in remote communities. Outback Stores opened its store, the Nguru-Walalja store (known as “The New Shop”) at Yuendumu in August this year in partnership with the local Women’s Centre. The Outback Stores shop at Yuendumu is the only store here that can accept income-quarantined money or process the stored-value BASICS cards.

The Big Shop has had new management since 1 July 2008. FaHCSIA staff who have visited the store have commented favourably on the changes implemented by the new management, including a doubling of stock lines, stopping ‘book-up’, increased debt recovery and other initiatives. FaHCSIA staff were pleased with the changes and encouraged the new store managers to make application to process income-quarantined money. The Big Shop applied for a licence from FaHCSIA in August and has also applied to Centrelink for permission to accept BASICS cards. They say that all they have had in reply is confusion and delay.

It is now December and Kevin Rudd’s Christmas bonuses will flow right past the Big Shop, straight into the tills of Outback Stores or down the 300 kilometres of rough roads to Alice Springs.

In their email The Big Shop managers told minister Macklin:

This policy disadvantages the residents/consumers of Yuendumu by not offering them freedom of choice of where to shop in their own community. The inability of customers to spend their quarantined money in this store is damaging to the store and while we are making a recovery from previous mismanagement the inability to maximise our income opportunities can only be seen that way

Crikey asked the ACCC and Minister Macklin about the anti-competitive issues raised by the Big Shop managers. Minister Macklin has yet to reply. The ACCC referred Crikey to Macklin’s FaHCSIA.